I guess it's worth $100 IF you've heard it run and it sounds ok. If it doesn't run, tell him you'll give him scrap price ($25) and get it out of his way. That way if it turns out to be a total mess, you can get your money out of it.
From what you said, it'll need at least a rear diff. ($200), rear axle ($100), front axles ($50 each), maybe a front diff. ($200). Those a used prices.
From the picture, it looks like it needs tie rods. Then you've got the unknown....brakes, transmission, clutch, etc.
It could be a money pit. Then again, it could be worth sinking $500-1000 in. One thing it has going for it, it's a Yamaha 350. Those engines are like the Energizer bunny.